Resources
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July 17, 2026
New Fannie Mae Lending Guidelines
IS YOUR CONDO ASSOCIATION COMPLIANT?
If not, it could negatively impact the ability to buy and sell condo units in your community, and in the process could hurt the value of your property.
FNMA (“Fannie Mae”) and FMAC (“Freddie Mac”) are government sponsored entities which buy mortgages from lenders and then sell them on the secondary market. In fact, it is reported that they influence approximately 70% of all loans extended to purchase residential real estate. They set underwriting standards for lenders and control loan eligibility for such transactions. Lenders rely on these guidelines when deciding whether or not to offer a mortgage loan to a potential buyer.
Changes in these guidelines as they apply to condos and co-ops (not HOAs) were announced earlier this year. Beginning August 3, 2026 the following changes will take effect:
- Enhanced reserve account component: A condominium association’s annual contribution to its reserves account must equal at least 15% of its annual budgeted income assessment (as of January 4, 2027) OR it must contribute to its reserves in an amount equal to the highest reserve contribution option identified in its most recent reserve study…and the new guidelines will no longer accept the “Baseline Funding” option
- Relaxed rental requirements: The 50% limit on rentals has been removed
- Relaxed property insurance requirements: Condo Associations must maintain property insurance on a “replacement cost basis”, but no longer on roofs (that is, roofs must still be insured, but can now be on an actual cash value cost basis…which is less expensive)
IMPORTANT NOTE: these new guidelines do not replace or otherwise negate a condominium association’s obligation to comply with New Jersey’s Structural Integrity and Reserves law that took effect in 2024.
Contact the attorneys in the Community Associations Department of Hill Wallack LLP for any legal assistance you need in preparing your community for the application of these new lending guidelines.
